Ally or Acquire

Disney’s
The Need Perspective
Alternative Advantages Disadvantages
Acquisition of Pixar -Sequential synergy between companies (Pixar’s CG production -Cultural differences in the two companies (such as the impact of Steve Job’s
and Disney’s marketing) personality of the Disney boardroom)
-No problems regarding revenue sharing, rights management etc. -Impact of Pixar’s P/E ratio diluting Disney’s healthy P/E ratio
-Establishment of Disney in the CG market without having to spend
time or money on establishment of CG technology
-Positive industry associations (most notably Apple)
-Weakening of competitors eager to collaborate with Pixar

Strategic Alliance with -A less risky proposition with risk divided between Pixar and -Pixar’s terms of renegotiation would cause Disney to lose out on revenue it was
Disney entitled to in the previous deal
Pixar -Cheaper than an acquisition -Pixar was adamant for a new revenue-sharing agreement to get more than the 40%
-Familiarity of operations within Pixar would help Disney of the movie revenue it was getting
-Pixar would be free to pursue projects with other studios
-Disney wouldn’t have satisfactory in-house CG expertise

Pixar’s Perspective
Alternative Advantages Disadvantages
Allowing Acquisition -Access to Disney’s IP and creative muscle would allow more -Uncertainty about the impact of the acquisition on culture
and better movies to be made -Lack of creative freedom
-Disney’s marketing and merchandising would ensure greater
returns
-Would allow Jobs to remain part of Pixar without the
pressure and time constraints of being CEO of two major
companies at once
Alliance -Preservation of company culture -Possible dearth of tome given to Pixar by Steve Jobs due to
-Creative freedom commitment to Apple
-Option to work with other studios if need/situation arises -Lower barrier of entry into CG technology would mean more
competition increasing risk